---
title: An Insurer Will Write 1,500 New Business Policies in California's Wildfire Areas, at 15 Percent Higher Rates
description: Farmers has filed a California rating plan to write more than 1,500 new business policies in wildfire distressed areas, at rates about 15 percent higher.
author: Darie Nani (Editor-in-Chief)
updated: 2026-08-01T05:27:17.308Z
canonical: https://www.sovereignmagazine.com/article/farmers-california-wildfire-business-policies-rating-plan
image: https://cdn.nanimediahouse.com/california-wildfire-commercial-coverage-79724.webp
categories: Business
content_type: News
region: California
publication: Sovereign Magazine
schema_type: Article
---

Farmers Insurance has filed a rating plan with California regulators that would put more than 1,500 new business owner and business property policies into the parts of the state the Department of Insurance designates as wildfire distressed, over two years. The filing anticipates a statewide average rate increase of just over 15 percent, and it proposes an effective date of 1 February 2027.

That is the trade, and for a California business owner who has spent two renewal cycles being told no, it is the first plain statement of what saying yes now costs.

The plan covers seven segments: habitational property, meaning apartments, condominiums and planned unit development communities, plus auto service shops, [commercial real estate](https://www.sovereignmagazine.com/article/california-s-office-occupancy-lag-creates-new-dynamics-for-commercial-real-estate-services), retail, office, service and wholesale. Farmers is pairing it with its workers' compensation program and a recently refreshed commercial auto program. Applicants still have to meet the underwriting guidelines, and the company is directing business owners to their local Farmers agent. The filing is under review and is not approved.

> "As one of the largest insurers of small businesses in California, we see a great opportunity to grow our market among business owners throughout the state."
> — Eric Coleman, president of business insurance, Farmers Insurance

## The State Traded Rate Freedom for Writing Commitments

The terms come out of Insurance Commissioner Ricardo Lara's [Sustainable Insurance Strategy](https://www.insurance.ca.gov/01-consumers/180-climate-change/sustainable-insurance-strategy.Cfm), which reset a market where nothing obliged an insurer to sell anything. Before it, the Department notes, insurance companies were not required by law to write policies at all, so availability came down to each company's own commercial judgment.

The strategy changed both sides of that. Insurers may now use forward-looking wildfire catastrophe models when they set rates, something every other US state already permits and California did not. In exchange they take on writing commitments in the areas that had been abandoned. The Department [completed its review](https://www.insurance.ca.gov/0400-news/0100-press-releases/2025/release052-2025.cfm) of the first such model, Verisk's wildfire model for the United States, after a six-month process open to public participation, with models from Karen Clark and Company and from Moody's also under review.

On the residential side the commitment is expressed as a share: insurers must write policies covering at least 85 percent of properties in distressed areas, a requirement the Department says will reach more than 1.5 million homeowners in wildfire-distressed areas and on the FAIR Plan. Farmers' commercial commitment is expressed differently, as a count of new policies rather than a share of the market.

## The Commercial Book Barely Moved While the Residential One Turned

The residential side has been moving, and its effects are visible in the state's insurer of last resort. The FAIR Plan added about 16,000 residential policies in the first quarter of 2026, growth of about 2.4 percent on the quarter before, down sharply from the 35,000 to 50,000 a quarter it was taking on from 2024 through September 2025. The Department reads the slowdown as an early sign that homeowners are finding cover in the ordinary market again. Six of California's ten largest home [insurance groups](https://www.sovereignmagazine.com/article/hurricane-erin-exposes-insurance-coverage-gaps-as-coastal-claims-disputes-mount) have now committed to stay and grow in the state. The Department's fuller list of committed insurers includes Farmers, Mercury, CSAA, USAA, Horace Mann, Pacific Specialty and California Casualty, along with Travelers and AAA SoCal.

Commercial policyholders saw almost none of that. Over the same stretch the FAIR Plan's commercial count went from 21,200 policies to 21,464, a rise of 264. The Department maintains two separate distressed-area lists, one of residential counties and ZIP codes and one of commercial ZIP codes, and the machinery built around the residential list is the part that has been working.

The state's own commercial patch is temporary. A high-value FAIR Plan commercial policy now offers coverage up to a total aggregate limit of $100 million per location for homeowner and condominium associations, farms and other businesses, and the program is written to expire in 2028 once the market is expected to have improved on its own.

## FAQ

**Q: Can you get commercial fire insurance in California?**
It has been difficult in the areas the state designates as wildfire distressed, which is the gap this filing addresses. If the plan is approved, Farmers would write more than 1,500 new business owner and business property policies in those areas over two years, from February 2027. The FAIR Plan, the state's insurer of last resort, remains the fallback and now carries a high-value commercial policy covering up to $100 million in aggregate per location.

**Q: What is an insurance rating plan?**
The set of rates and rules an insurer proposes to charge for a class of business. In California it has to be filed with the Department of Insurance and reviewed before it can be used, which is why Farmers' plan carries a proposed effective date rather than a live one.

**Q: What is the Sustainable Insurance Strategy?**
Insurance Commissioner Ricardo Lara's program for reopening California's property insurance market. It lets insurers use forward-looking wildfire catastrophe models in their rate filings, which every other US state already allowed, and in return requires them to commit to writing policies in high-risk areas. The Department says it has saved consumers more than $6.6 billion under Lara.

**Q: What are wildfire distressed areas?**
Counties and ZIP codes the California Department of Insurance designates each year as places where wildfire risk has limited the availability of coverage. The Department publishes a residential list and a separate commercial list, and the designation is what triggers an insurer's writing commitments.

**Q: Does the California FAIR Plan cover commercial property?**
Yes. It held 21,464 commercial policies at the most recent count, up from 21,200, and it added a high-value commercial policy offering up to $100 million in aggregate coverage per location for homeowner and condominium associations, farms and other businesses. That program is set to expire in 2028.